SAN FRANCISCO (KPIX) — California state senator Mark DeSaulnier, speaking with KPIX 5’s Phil Matier on Sunday, defended a proposed bill which would punish corporations that pay their chief executives more than a hundred times the median wage of their workers. The following is an edited transcript of their conversation.

PHIL MATIER: [Your proposed bill] would punish corporations that pay their CEOs more than one hundred times the median wage of their workers. But also it would give breaks to those [companies] that don’t. Correct?

MARK DeSAULNIER: Yes. It’s one bill that’s part of a series of bills that comes out of something called EPIC — Ending Poverty and Inequality in California — that I started last year. So, CEO compensation, all after World War II is 30% above the median. It’s now almost 300%. Most of the benefit of the recovery — 95% — has gone to that “one percent.” So a lot of us think — and history teaches us — that’s bad for the economy and bad for democracy.

MATIER: OK, but the capitalist system is based on the idea that you make what you can and when the government gets involved in that we have possible socialist states and it doesn’t always work out the way you planned it to. Why even jump into this water?

DeSAULNIER: Madison famously said that if people were angels there’d be no need for government. And he also said that taxes were the price we pay for freedom. So tax policy has always been such — to try to keep a dispersal of income. The middle income is important because they’re the ones who spend the money, they’re the ones who build things. If you don’t have people who can spend money and buy things, the economy’s not gonna move anywhere — which is what’s been happening.

MATIER: Well I can’t argue with you that the tax system is fair — or has been fair … what effect do you think this would have and what would be the downside?

DeSAULNIER: I don’t see a downside to it. We’re gonna incentivize folks. I was a small business owner most of my life. If I paid myself 300 percent [sic] more than what my median workers [earned] in [my] restaurant I wouldn’t be in business very long. It’s important for America to have a strong middle class and for people to move up into it. California now has the highest poverty rate in the United States. One in four Californians is now in poverty.

MATIER: If you’re in a business and you say, OK, I’m paying these people this amount and this guy or gal is getting [paid] way up here and we whack them, that isn’t necessarily going back to the workers… there’s no guarantee that money is going back to the workers.

DeSAULNIER: There’s no guarantee but this is a series of bills so, in my years in politics, there’s very rarely one bill — especially for something as complex as inequality in the United States. It’s a whole series of bills we’ve come up with out of this caucus. But it’s an important one.
MATIER: OK, what would the next step be? If the goal is to increase the wage of the middle class, how does this do that?

DeSAULNIER: It’s not “one step” it’s a series of steps it’s a conversation… we want to do an earned income tax credit in the state of California, we don’t have one of those. That raises everybody up. We want to raise the minimum wage. We want to incentivize companies to make sure that they pay their workers the real value for the work that’s being done.

MATIER: OK, but we are in the real world. We’re having this conversation. And if we raise the minimum wage in California … these companies that you’re trying to get to hire more people — paying them better — are going to move to another state, and possibly the CEO is going to go with them and we’re gonna lose the whole nine yards.

DeSAULNIER: And if we follow that argument to its logical conclusion, we’d just keep lowering the minimum wage until it’s equal to third-world countries and then we lose the wealth we have here. We all have to share in all of the production that we have here in California. This is the eighth largest economy in the world. We get fifty percent of the investment — the VC — in the world. There’s a reason for that: because there are bright, hard-working people here. We just want to make sure that everybody’s part of our success.